Question 1

One of the major problems facing executors in managing the estate is

Accepted Answer

A) identifying deductions. 
B) liquidity. 
C) the unified credit computation. 
D) determining the method to value assets. 
A) identifying deductions. 
B) liquidity. 
C) the unified credit computation. 
D) determining the method to value assets. B

Question 2

The value of stock that is not publicly traded may be determined by considering

Accepted Answer

A) the nature and history of the business. 
B) earning capacity. 
C) dividend-paying capacity. 
D) all of the above 
A) the nature and history of the business. 
B) earning capacity. 
C) dividend-paying capacity. 
D) all of the above D

Question 3

Identify which of the following statements is false.

Accepted Answer

A) To qualify for the marital deduction,property must be includible in the decedent's gross estate. 
B) Property is not eligible for the marital deduction if it passes to the spouse under the individual's dower rights. 
C) A terminable interest is one that ceases upon the passage of time or the occurrence of some event. 
D) Some,but not all,terminal interests qualify for the marital deduction. 
A) To qualify for the marital deduction,property must be includible in the decedent's gross estate. 
B) Property is not eligible for the marital deduction if it passes to the spouse under the individual's dower rights. 
C) A terminable interest is one that ceases upon the passage of time or the occurrence of some event. 
D) Some,but not all,terminal interests qualify for the marital deduction. B

Question 4

Two years ago,Nils transfers a $200,000 life insurance policy on his life to his daughter,Gail.The policy is worth $60,000 at the time of transfer and Gail pays Nils $50,000.When Nils dies this year,the $50,000 cash is still in a savings account.The consideration offset when computing Nils's gross estate is

Accepted Answer

A) $0. 
B) $50,000. 
C) $150,000. 
D) $166,667. 
A) $0. 
B) $50,000. 
C) $150,000. 
D) $166,667.

Question 5

Proceeds of a life insurance policy payable to the estate's executor,as the estate's representative,are

Accepted Answer

A) includible in the decedent's gross estate only if the premiums had been paid by the insured. 
B) includible in the decedent's gross estate only if the policy was taken out within three years of the insured's death. 
C) never includible in the decedent's gross estate. 
D) always includible in the decedent's gross estate. 
A) includible in the decedent's gross estate only if the premiums had been paid by the insured. 
B) includible in the decedent's gross estate only if the policy was taken out within three years of the insured's death. 
C) never includible in the decedent's gross estate. 
D) always includible in the decedent's gross estate.

Question 6

In 2001,Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife.When Alejandro dies in the current year,a comparable contract would have cost $81,000.What amount is included in Alejandro's gross estate?

Accepted Answer

A) $0 
B) $81,000 
C) $100,000 
D) $181,000 
A) $0 
B) $81,000 
C) $100,000 
D) $181,000

Question 7

Betty dies on February 20,2013.Her estate consisted of the following assets,all valued as of her date of death: Stock with a basis of $40,000 and a fair market value of $200,000
Home valued at $1,500,000 and a basis of $490,000
Cash of $70,000
Life insurance on Betty's life owned by her daughter with a $500,000 face value
What is Betty's gross estate?

Accepted Answer

A) $600,000 
B) $1,100,000 
C) $1,770,000 
D) $2,270,000 
A) $600,000 
B) $1,100,000 
C) $1,770,000 
D) $2,270,000

Question 8

Denise died April 1 and owned several bonds that paid interest March 31 and September 30.Also,she owned stock that paid dividends quarterly on March 31,June 30,September 30,and December 31.Denise's estate received the interest and dividends on the payment dates.What should be included in Denise's gross estate?

Accepted Answer

A) all interest and dividends received in the year of death 
B) only interest and dividends received prior to the date of death 
C) only interest and dividends received after the date of death 
D) none of the interest and dividends received 
A) all interest and dividends received in the year of death 
B) only interest and dividends received prior to the date of death 
C) only interest and dividends received after the date of death 
D) none of the interest and dividends received

Question 9

Sasha gives $1,000,000 to her granddaughter.Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption.What is the amount of her tax on this transfer?

Accepted Answer

A) $450,000 
B) $400,000 
C) $1,450,000 
D) $652,500 
A) $450,000 
B) $400,000 
C) $1,450,000 
D) $652,500

Question 10

Identify which of the following statements is true.

Accepted Answer

A) The unified credit is the only credit common to both the gift and estate tax computation. 
B) For estate tax purposes,publicly traded stocks are valued at their closing price on the date of death. 
C) Stocks traded on a stock exchange are valued at the closing price for the date of death unless the alternate valuation date is elected. 
D) All of the above are false. 
A) The unified credit is the only credit common to both the gift and estate tax computation. 
B) For estate tax purposes,publicly traded stocks are valued at their closing price on the date of death. 
C) Stocks traded on a stock exchange are valued at the closing price for the date of death unless the alternate valuation date is elected. 
D) All of the above are false.

Question 11

Joe dies late in 2017 and his estate is subject to an estate tax of $2 million.He leaves all of his assets to his daughter,Claudia.Claudia dies in early 2019.Which of the following statements is correct?

Accepted Answer

A) Claudia's estate receives no credit or deduction for the tax paid by Joe's estate. 
B) Claudia's estate receives a credit for $1,000,000 of Joe's estate tax. 
C) Claudia's estate receives a credit for $2,000,000 of Joe's estate tax. 
D) Claudia's estate receives a deduction for $2,000,000 of Joe's estate tax. 
A) Claudia's estate receives no credit or deduction for the tax paid by Joe's estate. 
B) Claudia's estate receives a credit for $1,000,000 of Joe's estate tax. 
C) Claudia's estate receives a credit for $2,000,000 of Joe's estate tax. 
D) Claudia's estate receives a deduction for $2,000,000 of Joe's estate tax.

Question 12

Which of the following credits is available for estate tax purposes?

Accepted Answer

A) investment tax credit 
B) credit for income taxes paid on decedent's final return 
C) credit for estate taxes paid on certain prior transfers 
D) All of the above are available. 
A) investment tax credit 
B) credit for income taxes paid on decedent's final return 
C) credit for estate taxes paid on certain prior transfers 
D) All of the above are available.

Question 13

The alternate valuation date can be elected for estate tax purposes only if the election

Accepted Answer

A) increases the value of the gross estate. 
B) decreases the value of the gross estate. 
C) decreases the estate tax liability (after reduction for tax credits). 
D) Both B and C are required. 
A) increases the value of the gross estate. 
B) decreases the value of the gross estate. 
C) decreases the estate tax liability (after reduction for tax credits). 
D) Both B and C are required.

Question 14

A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

Accepted Answer

A) True 
 B)False

Question 15

Yoyo Corporation maintains a retirement plan for its employees to which it makes 70% of the contributions and the employees make 30%.Gary dies this year and is employed at the time of his death.Gary's spouse will receive an annuity valued at $600,000 from the retirement plan.How much of the annuity will be included in Gary's gross estate?

Accepted Answer

A) $600,000 
B) $420,000 
C) $180,000 
D) $0 
A) $600,000 
B) $420,000 
C) $180,000 
D) $0

Question 16

On March 1,Sue transfers stock worth $20,000 to Frank.How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

Accepted Answer

A) six months 
B) one year 
C) three years 
D) No minimum time period exists,but she must be alive at transfer of ownership. 
A) six months 
B) one year 
C) three years 
D) No minimum time period exists,but she must be alive at transfer of ownership.

Question 17

The alternate valuation date is generally

Accepted Answer

A) 3 months after the date of death. 
B) 6 months after the date of death. 
C) 9 months after the date of death. 
D) 12 months after the date of death. 
A) 3 months after the date of death. 
B) 6 months after the date of death. 
C) 9 months after the date of death. 
D) 12 months after the date of death.

Question 18

Taxpayers can avoid the estate tax by making gifts at least a year prior to death.

Accepted Answer

A) True 
 B)False

Question 19

Identify which of the following statements is true.

Accepted Answer

A) The estate tax on interests in certain closely held businesses may be paid in installments over a 15-year period if elected. 
B) An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until six months after the interests of the other person(s)terminate. 
C) A corporation with 25 owners can be classified as a closely held business if the decedent's gross estate holds 10% of the stock. 
D) All of the above are false. 
A) The estate tax on interests in certain closely held businesses may be paid in installments over a 15-year period if elected. 
B) An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until six months after the interests of the other person(s)terminate. 
C) A corporation with 25 owners can be classified as a closely held business if the decedent's gross estate holds 10% of the stock. 
D) All of the above are false.

Question 20

Identify which of the following statements is true.

Accepted Answer

A) Administrative expenses are not deductible on the estate's income tax return. 
B) Casualty or theft losses incurred during the administration of the estate are not deductible on the estate tax return. 
C) There is a limitation of $100,000 on the charitable contribution deduction for estate tax purposes. 
D) All of the above are false. 
A) Administrative expenses are not deductible on the estate's income tax return. 
B) Casualty or theft losses incurred during the administration of the estate are not deductible on the estate tax return. 
C) There is a limitation of $100,000 on the charitable contribution deduction for estate tax purposes. 
D) All of the above are false.

Exam 13: The Estate Tax

One of the major problems facing executors in managing the estate is

The value of stock that is not publicly traded may be determined by considering

Identify which of the following statements is false.

Proceeds of a life insurance policy payable to the estate's executor,as the estate's representative,are

In 2001,Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife.When Alejandro dies in the current year,a comparable contract would have cost $81,000.What amount is included in Alejandro's gross estate?

Sasha gives $1,000,000 to her granddaughter.Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption.What is the amount of her tax on this transfer?

Identify which of the following statements is true.

Joe dies late in 2017 and his estate is subject to an estate tax of $2 million.He leaves all of his assets to his daughter,Claudia.Claudia dies in early 2019.Which of the following statements is correct?

Which of the following credits is available for estate tax purposes?

The alternate valuation date can be elected for estate tax purposes only if the election

A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

On March 1,Sue transfers stock worth $20,000 to Frank.How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

The alternate valuation date is generally

Taxpayers can avoid the estate tax by making gifts at least a year prior to death.

Identify which of the following statements is true.

Identify which of the following statements is true.

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